Sections

AP Ethical Council targets 13 investments

Related images

  • AP Ethical Council targets 13 investments

SWEDEN - The Ethical Council of the Swedish AP Buffer pension funds claimed three successes in 2008 in its dialogue approach to remedying breaches of ethical guidelines, although 13 companies are still on the Council's 'focus list'.

In its 2008 annual report the Ethical Council, which has representatives from AP1-4, noted the Council "lacks the resources to pursue active governance of such extensive holdings" as the funds have investments in globally-diversified portfolios that include thousands of international companies.

Instead, the Council has revealed the screening around 3,500 investments is "based on the type of infringement, where it has occurred and the amount of influence the Ethical Council expects to have".

An initial screening of the combined holdings at the beginning of 2007 resulted in 12 companies being selected for "active dialogue", but the Council noted this "focus list" gradually changed in 2007 and 2008 "as certain companies have been removed from the list after meeting the goals of our dialogue and have been replaced by new ones". (See earlier IPE article: AP Funds in dialogue with 13 firms over 'ethical breaches')

Sodexo, BHP Billiton and Chevron Corporation's Nigerian arm were all removed following successful dialogue relating to improvements on human and labour rights, however L-3 Communications Holdings was removed following exclusion from the investment universe. (See earlier IPE article: Pension pressure improves human rights at Sodexo)

The company had already been engaged in dialogue regarding alleged human rights violations in an Iraqi prison, however following reports suggesting it marketed several components for cluster bombs through two subsidiaries on its website, the Council placed it on its exclusion list along with eight other firms involved in manufacturing cluster munitions. (See earlier IPE article: Swedish buffer funds exclude cluster bomb investment)

The Council met the majority of companies it is in dialogue with "face-to-face" in 2008, and while many have taken steps to address the problems quickly, the Council added it has chosen to cooperate with other investors to "increase its leverage and the opportunities to exert an influence".

Christina Kusoffsky Hillesöy, chairwoman of the Ethical Council, said: "This approach to bringing about changes and improvements requires patience and the establishment of mutual respect and trust, and is a strategy that is well-suited to the long-term nature of the four funds' investments and professional relationships."

The 13 companies currently on the Council's focus list are:

AES Corporation - human rights in Panama Bridgestone Corporation - labour rights in Liberia Chevron Corporation - environmental issues in Ecuador; Duke Energy Corporation - environmental issues in USA Freeport-McMorran Copper & Gold - environmental issues in Indonesia Grupo Ferrovial S.A. - environmental issues in Poland PetroChina Company Limited - environmental issues in China Rio Tinto - environmental issues in Indonesia Thales SA - corruption in South Africa Toyota Motor Corporation - labour rights in Philippines Vedanta resources - human rights and environmental issues in India Wal-mart stores - labour rights in USA Yahoo! Inc - human rights in China

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

Begin Your Search Here